New Guide for Appraisers Factors Energy Efficiency Into Property Valuations

The Institute for Market Transformation and the Appraisal Institute have collaborated and released an updated guide that features details in rating energy performance on property value. Energy efficient properties will see an increase in appraisal values as a result.

Today, at the ACEEE Energy Efficiency Finance Forum in Boston, the Institute for Market Transformation (IMT) and the Appraisal Institute released the second edition of an appraiser’s guide to factoring energy performance into real estate valuation.

The organizations point out that demand for green and energy-efficient buildings has risen noticeably. As such, today’s appraisers need to be well-informed concerning the effects energy efficiency has on property value. Studies have found that buildings rated as energy efficient are strong financial performers: many have higher occupancy rates, command higher rents, and sell for more money than similar less-efficient properties.

But the value add has been hard to track and easy to overlook. Energy efficiency is invisible, and its benefits—such as lower utility bills and higher net operating income—often reveal themselves gradually over time. IMT and the Appraisal Institute’s report will help appraisers analyze and account for information about buildings’ energy performance.

“This report will help appraisers fully account for energy efficiency in their valuations,” said Cliff Majersik, IMT’s executive director in a press announcement. “When the value of efficiency is captured more fully industry-wide, it will enhance the availability of financing for energy efficiency in buildings.”

Appraisal Institute president Sara Stephens, added, “As green and energy-efficient features play a larger role of the real estate industry, it’s increasingly important that appraisers know how to value those properties.”